Ideas in Australian trade policy

Trade pol­i­cy is, usu­al­ly, what­ev­er emerges as the pos­si­bly tem­po­rary polit­i­cal out­come of a com­pe­ti­tion between vest­ed inter­ests for gov­ern­ment favour. It’s no use pre­tend­ing that delib­er­a­tion or reflec­tion deter­mine the out­come on a reg­u­lar basis. But that’s not to say that the dis­course of trade pol­i­cy is based only on inter­est and prej­u­dice and is free of ideas. What ideas mat­ter to Aus­tralian trade pol­i­cy? Two of the most influ­en­tial sources have been: the eco­nom­ic analy­sis of trade and the Aus­tralain expe­ri­ence of mul­ti­lat­er­al diplo­ma­cy. Heres a thumb­nail sketch. A more care­ful, detailed account that, how­ev­er, owes noth­ing to my views, is avail­able “here”:http://titles.cambridge.org/catalogue.asp?isbn=0521785251 In some coun­tries, the ideas that emerge most often in dis­cus­sion of trade pol­i­cy are shared assump­tions about nation­al aspi­ra­tions, the expres­sion of pow­er, the devel­op­ment of region­al alliances, or claimed racial or nation­al char­ac­ter­is­tics. These ideas don’t have much sig­nif­i­cance for Aus­tralian trade pol­i­cy. Aus­tralian trade pol­i­cy think­ing has been strong­ly affect­ed by eco­nom­ic analy­sis since the late 1960’s when the “Tar­iff Board” was appoint­ed to make rec­om­men­da­tions on assis­tance to man­u­fac­tur­ing indus­try. Arguably, it was the development—and the the even­tu­al failure—of Australia’s own high-pro­tec­tion man­u­fac­tur­ing indus­try strate­gies of the first six decades after Fed­er­a­tion, and loss of oppor­tu­ni­ties to ‘hide’ the pro­tec­tion of agri­cul­ture through manip­u­la­tion of the exchange rate (after the min­er­als boom of the late 1960s), that gave it this char­ac­ter. Aca­d­e­mics, cer­tain­ly, but also bureau­crats and even Min­is­ters were ready to con­sid­er the ‘Aus­tralian case’ for pro­tec­tion as a sort of social exper­i­ment that offered either lessons about the futu­il­i­ty of pro­tec­tion or an oppor­tu­ni­ty for fur­ther tin­ker­ing (depend­ing on their view­point). The 1970s saw the devel­op­ment of techniques—many of them by Aus­tralian economists—for mod­el­ing com­plex net­works of mar­kets for resources and food prod­ucts. The Aus­tralian Bureau of Agri­cul­tur­al and Resource Eco­nom­ics (“ABARE”:http://www.abareeconomics.gov.au/), the fore­run­ners of the “Pro­duc­tiv­i­ty Commission”:http://www.pc.gov.au/ as well as sev­er­al aca­d­e­m­ic fac­ul­ties spe­cialised in this form of eco­nom­ic mea­sure­ment and have been a fount of world-class analy­sis and ana­lysts since[1]. Mul­ti­lat­er­al diplo­ma­cy—the oth­er source of influ­en­tial ideas—had been a vec­tor of Australia’s matur­ing diplo­mat­ic inde­pen­dence from Britain—and occa­sion­al­ly from the influ­ence of the Unit­ed States—since the late 1940s when Australia’s for­eign Min­is­ter (H V Evatt) won Chair­man­ship of the new Unit­ed Nations Gen­er­al Assem­bly in return for his con­tri­bu­tions at the San Fran­cis­co con­fer­ence. Its roots lie in much ear­li­er attempts by Aus­tralian gov­ern­ments to assert some influ­ence on a patron­iz­ing Impe­r­i­al Cab­i­net dur­ing the last few decades of the British Empire. By the 1960s, Aus­tralia was already using every oppor­tu­ni­ty in forums such as the GATT—where the rule is “one coun­try, one vote”—to assert it’s trade inter­ests more strong­ly than could have been jus­ti­fied by it’s eco­nom­ic pow­er. Of course, it didn’t hurt then, or lat­er, that the Trade Depart­ment, which sup­plied the rep­re­sen­ta­tives in the GATT, deserved its rep­u­ta­tion for a pugna­cious, argu­men­ta­tive cul­ture or that its rep­re­sen­ta­tives were at home in (a ver­sion of) the eng­lish lan­guage. From the ear­ly 1980’s, the cre­ation of exten­sive trade data col­lec­tions by the UN and WTO and increased researcher access to com­put­ers capa­ble of solv­ing the mass­es of simul­ta­ne­ous equa­tions that dri­ve cred­i­ble mod­els of glob­al com­mod­i­ty mar­kets made it pos­si­ble to iden­ti­fy and quan­ti­fy the exter­nal impacts of pro­tec­tion, invest­ment and sup­ply poli­cies in Europe, Japan and North Amer­i­ca on the com­mer­cial inter­ests of the rest of the world. A com­bi­na­tion of expe­ri­ence ‘work­ing the room’ in GATT—developing alliances with oth­er small economies—and access to new ideas and data about glob­al impact of inap­pro­pri­ate sup­ply and pro­tec­tion poli­cies in Europe, Japan and North Amer­i­ca gave rise to and sus­tained Aus­tralian efforts to cre­ate glob­al coali­tions of gov­ern­ments from the ‘rest of the world’. The “Cairns Group”:http://www.cairnsgoup.org/ of agri­cul­tur­al exporters, cre­at­ed in 1986 with help from some Latin Amer­i­can economists/officials who trained in Aus­tralia has been by far the most suc­cess­ful of these. It has inspired some Aus­tralian-led spin-offs such as the “Glob­al Dairy Alliance”:http://www.globaldairyalliance.org/ and the “Glob­al Sug­ar Alliance”:http://www.queenslandsugar.com/page.cfm?pageid=180(the dri­ving force behind a ground­break­ing and “appar­ent­ly victorious”:http://www.inquit.com/article/309/sugar-case-victory-on-eu-subsidies WTO dis­pute). Both the lead­er­ship (Brazil, Argenti­na, South Africa) and strate­gies of the “G-20”:http://www.guardian.co.uk/wto/article/0,2763,1106544,00.html have them­selves spun-off the Aus­tralian-led Cairns Group. Australia’s mul­ti­lat­er­al trade pol­i­cy suc­cess­es of the past two decades—in the Uruguay Round of WTO nego­ti­a­tions and beyond—have fad­ed. The G-20, which emerged in the Can­cún Con­fer­ence, has over­shad­owed it’s Cairns Group ori­gins and the increas­ing eco­nom­ic pow­er of giant devel­op­ing economies (Brazil, India) has secured the new group a role that could well endure longer than the diplo­mat­ic ploys of the Cairns Group, pro­vid­ed that it finds a basis for coher­ence oth­er than oppo­si­tion to the EU and USA. fn1. “Here’s”:http://www.pc.gov.au/research/speeches/cs20021008/ a nice brief account of one out­stand­ing analyst—Richard Snape—from a eulo­gy by the Chair­man of the Pro­duc­tiv­i­ty Com­mis­sion (Gary Banks)

Peter Gallagher

Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.

He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher